SOCIAL CAPITAL AND NETWORK THEORY

Social Capital and Network Theory



Social Capital and Network Theory

Introduction

Social network theory is based on the assumption that social relations are the key to explaining both individual action and collective outcomes. Networks may be defined as bounded sets of actors, be they organizations, institutions, or individuals that are connected by specific relationships. Network theory refers to the study of the structural forms—or patterning—of the ties that link these units. Attention to social networks has a long tradition, specifically in social anthropology, social psychology and sociometrics, as well as economic sociology and organizational theory. Lately, real-world phenomena, such as changes in the organization of capitalism, experiments in new forms of decentralized governance as well as advances in the computer-based analytical tools associated with network theory, have increased interest in network approaches in other parts of the social sciences as well. This paper discusses social capital and network theory in a concise and comprehensive way.

Social Capital and Network Theory: A Discussion

In words of Lin (1999a) social capital can be thought of as the stock of social trust, networks, norms, and generally the interconnectedness and strength of relationships among individuals in organizations and communities. Social capital is important since higher levels of social capital are related to the health and prosperity of individuals, organizations, and communities (Lin, 1999a). Social capital might be thought of as the glue that holds members together and enables members of a community to accomplish their goals and solve their problems.

The dictionary defines capital as wealth in any form that can be used to produce more wealth. Wealth should be understood here as not just money but any asset that is valued and accumulated (Lin, 1999a), including effective goal attainment, happiness, group stability, and peace, or perhaps friendship, love, and affection among members of a group.

Capital or wealth comes in various forms. We might distinguish the following forms of capital:

Physical capital —physical tools or items that increase productivity (e.g., a computer)

Human capital —the knowledge and skills that improve productivity (e.g., the knowledge resulting from an MBA curriculum)

Financial capital —accumulated money that enhances opportunities (e.g., loans or savings to begin a new start-up business)

Social capital —the stock of social trust, networks, norms, and generally the interconnectedness that enable communities to deal more effectively with common problems and issues (e.g., a quick response of volunteers to assist victims of a flood disaster)

Social capital is as old as human social grouping. Alexis de Tocqueville did not use the term but captured the essence of social capital in his famous discussion of the propensity of Americans to form civic associations. As an academic concept, social capital can be traced to early in the 20th century (Putnam & Feldstein, 2003). However, the concept became more widely studied and popularized in the 1990s, in particular from the work of Robert Putnam, who argued through systematic empirical analysis that there has been a steady decline of social capital in the United States since the ...